T-Mobile

Earlier this year T-Mobile announced a plan to offer its customers more flexibility by eliminating cell phone subsidies, and the carrier has followed through by rolling out its no contract data plans over the weekend. Instead of subsidizing cell phones and locking customers into two-year contracts, T-Mobile users can now choose one of several monthly data options. The plans start at $50/month, all the way up to $110 for 12.5GB/month. There is also a $70 unlimited option, and each plan comes with unlimited talk, text, and tethering.

The catch is customers will be forced to pay full prices for new phones, but at least there will be an option to do it in installments. For example, you can secure a $400 phone with a small down payment, and make monthly payments until it's paid off. T-Mobile hopes this will be a better and cheaper option for customers than what AT&T, Verizon and Sprint are currently offering.

After announcing that T-Mobile is close to activating nearly 2 million iPhones on its network, Chief Executive John Legere told Reuters, the carrier will start selling the iPhone in about three to four months. T-Mobile also plans to eliminate cellphone subsidies in an effort to offer its customer cheaper plans and more flexibility. Legere promised the Apple experience would be "dramatically different" for T-Mobile subscribers, and believes smartphone users will benefit from avoiding long contracts and restrictive data plans.

T-Mobile hopes the contract free iPhone will convince AT&T and Verizon Wireless customers to switch carriers, and believes its partnership with Apple will increase its market share by 5% or more. All the major U.S. carriers currently offer smartphones at a subsidized price, but customers are forced to agree to long contracts that prohibit them from upgrading their devices. T-Mobile's users will be able to freely exchange or sell their older devices once the subsidies and contracts are out of the picture.

With its back against the wall, T-Mobile has decided to shake up the mobile market by putting an end to subsidized smartphones. All four major U.S. carriers offer smartphones at a subsidized price, but customers must agree to long contracts which prohibit them from upgrading their devices. T-Mobile believes ditching the subsidy model favored by AT&T, Sprint and Verizon will appeal to customers who are tired of the restrictions. Chief Executive John Legere said under the new model customers will be able to freely upgrade their devices by trading them in.

Legere did not say when the carrier plans to rollout its new policy, but promised the Apple experience would be "dramatically different" for T-Mobile customers. T-Mobile also managed to avoid agreeing to the same $15.5 billion iPhone deal Sprint signed up for last year, and the move will help T-Mobile cut back on upfront costs.

Merrill Lynch's Scott Craig accurately predicted the deal last week when he told investors "speculation is heightening" that Deutsche Telekom and Apple will enter into an agreement. The deal gives Apple access to 98% of the U.S. post-paid market, and analysts are predicting T-Mobile will sell around 4 million iPhones next year.

The iPhone 5 can now be purchased unlocked in the U.S. via the Apple Store. An unlocked iPhone allows Apple customers to buy the device without agreeing to a two-year carrier contract, however, this also means users are stuck paying an unsubsidized price. Apple is offering the 16GB model for $649, the 32GB model for $749 and the 64GB model for $849.

The unlocked iPhone 5 only works with GSM wireless networks such as AT&T and T-Mobile (T-Mobile customers considering buying an unlocked iPhone 5 may want to wait until next week to see if the T-Mobile iPhone rumor is true). The unlocked iPhone 5 does not support CDMA-based carriers such as Verizon Wireless or Sprint, and requires a nano-SIM card to work.